Date of this Version
Much of the commentary on the new pension reform law suggests that it will be deleterious to defined benefit plans. We describe the economic policy background leading to the new law, the law’s main funding provisions, and analyze the volatility of required minimum contributions, leading us to the opposite conclusion. The new law should improve benefit security, reduce contribution volatility, and encourage responsible management and creative plan design, thereby improving the environment in which defined benefit plans are sponsored by employers and retirement benefits are earned by workers.
pension reform, defined benefit plans, retirement security
Working Paper Number
The views expressed here are those of the author and not those of Watson Wyatt Worldwide. © 2007, Mark J. Warshawsky
The author is appreciative of the considerable assistance of John Beneventano, David Wong, and Ben Weitzer, vigorous discussions with Jeffrey Brown, Kyle Brown and Ken Steiner, and helpful comments from Charles Blahous, Robert Clark, William Gale, Alan Glickstein, Jagadeesh Gokhale, David John, Olivia Mitchell, Kent Smetters, and Eugene Steuerle.
Date Posted: 17 December 2019